What Future in Australia ?

Bioethanol and Opportunities

Peter L Rogers Emeritus Professor, UNSW

November 20, 2006 Global Biofuels (2005/6)

- Brazil:16.5 bn L/a ethanol from molasses, sugar juice, 16 14 - US: 16 bn L/a ethanol from corn (20% total crop): 2.6% total US liquid fuels 12 10 - China: current 2 bn L/a ethanol (very large US 8 scale future plants projected) Ethanol 6 (bn L/a) - European Commission targets 2010 4 12 bn L/a (6% total liquid fuel) 2 - Australia : 120-150 m L/a: projected 0 350 m L/a by 2010 incl. biodiesel 1978 1988 1998 2005 (approx 1% total liquid fuels) Brazilian Ethanol Program

 Brazil produces 38% of world’s sugar with total 59m t/a

 28m t/a sugar converted to 16.5 bn L/a fuel ethanol

 Market share 15.7% of total liquid fuels

 Use of ethanol-based fuels originally mandated by the Brazilian Government in 1980s

 Production costs $US 0.15-0.20/litre with large scale fermentation and low cost batch technology

 Ethanol now a global commodity with significant exports from Brazil to the US and SE/NE Asia. The European Solution

European Commission approval: 640 m litres surplus wine to biofuels Key Drivers for Biofuels in Australia

 High price of oil and increasing oil imports ($12bn/a in 2005/6)

 Bio-security advantages (local production)

 Potential for significant regional economic development

 Biofuels based on renewable agricultural resources

 Reduced Greenhouse Gas emissions (CO2)

 Health benefits: reduced vehicle emissions including particulates (PM10)

Australia’s Increasing Liquid Fuel Deficit

12  Deficit covers imports of gasoline, diesel and crude oil 10

8 Total  Significant recent increase liquid 6 fuel due to increased demand and deficit 4 declining local production AU$bn 2

 Deficit currently running at 0 1996 2002 $12bn/a (2005/6) Use of Renewable Resources : the Carbon Cycle

 Use of carbohydrate-based raw materials rather than those based on hydrocarbons

 Results in reduction in Greenhouse Gas (GHG) emissions

 Particular applications for commodity chemicals and biofuels (bioethanol) Greenhouse Gas Reductions

Biofuels Taskforce Report t the Prime Minister (2005)

“Consumption in 2010 of 350 ML biofuels (148ML ethanol and 202 ML biodiesel) would result in a total in total GHG emissions of approx 442,000 tonnes.

This reduction is estimated to comprise 107,000 tonnes from use of ethanol and 335,000 tonnes from use of biodiesel” GHG Savings (%) compared to petrol or diesel (data from US Argonne National Lab)

90

80

70

60

50

40

30

20

10

0 Cane Canola Waste Oil AMA Submission to Biofuels Taskforce (2005)

 AMA supports interventions that reduce negative health impacts of emissions such as particulates, aromatic components and gaseous irritants (eg NO2)

 AMA supports : -mandatory ethanol blends (10% in petrol; 20% in diesel) - reduction in highly toxic aromatics such as benzene in petrol - increased use of liquid petroleum gas (LPG) and compressed natural gas (CNG) in vehicles - installation of filters and gas-detoxification systems in vehicular tunnels in heavily populated cities Key Issues in Australia

 Govt policies - State mandates of E5, E10 blends; carbon credits - excise tax removal on imported ethanol in 2011 - reduced fuel tax concession (2011-2015)

 Land availability/additional inputs (water, fertilizers, pesticides) Risk of sustained drought conditions

 Limited opportunities for economies of scale

 Potential for lower cost non-food biomass crops

 Regulatory issues re GM crops/microbes for bioethanol production

 Support needed in Australia of oil and motor vehicle industries Biodiesel

 Diesel blends with plant/animal oils (B2 to B100).

 Potential for cost reductions (per tonne: $350; used $400; tallow $550; canola $900)

 Advantages: lower particulates (PM10) and GHG emissions, improved lubrication, higher flash point

 Other issues: meeting fuel standards, vehicle warrantees, cleaning of filters, higher gel point (tallow) - problems in colder climates

 Main producers: Germany 1920 ML/a; France 500 ML/a; US 290 ML/a;

 Australia: number of facilities including 110 ML/a from Tallow (BP) Fuel Ethanol Production

Traditional Processes : Fuel ethanol from sugars and starch hydrolysates Main Sources of Raw Materials for Fermentation Processes

 Sugar cane, etc main sources of sucrose usually as molasses ( $50/tonne)

 Corn, , cassava etc main sources of starch (enzymatic pre- treatment needed)

 Biomass/agricultural and forestry residues provide potential low cost substrates (opportunity cost $25-40 per tonne); however more complex pre-treatment and microbes needed. FactorsFactors affectingaffecting operatingoperating costscosts StarchStarch --BasedBased EthanolEthanol ProcessProcess Industrial ethanol production cell recycle/vacuum fermentation World Fuel Ethanol 2005 Costs of Production

Gasoline (NY Harbour) PROCESSING

Gasoline (fob Rotterdam)

Brazil (cane)

Thai Tapioca

USA (corn)

EU wheat

EU sugar beet

0 5 10 15 20 25 30 35 40 45 50 US Cents/litre New Technology : Ethanol from Biomass

 Biofuels Taskforce to PM (2005):

“Globally there is major investment in an emerging technology that can produce ethanol from lignocellulosic feedstock. This could become commercially viable within the next five to ten years”.

 US Department of Energy Secretary, Ray Orbach (Oct ’06)

“30% biofuels replacement target by 2030”. Developing lignocellulosic crops for energy fuels could use less intensive production techniques & poorer quality land”. ProjectedProjected EthanolEthanol ProductionProduction

Source: Mark Paster, Office of Biomass Program, US Department of Energy, 2002 Global R&D: Ethanol from Biomass

 Large scale pilot plant : Iogen (Canada) with Shell and PetroCanada 6 tonne/d wheat ; 250 L/t ethanol

 Swedish group (Lund): 2 t/d softwood; 350L/t ethanol Production costs: $US 0.45-0.50/L based on 200,000 t/a plant

 Dupont/NREL/Diversa: $US 38m project to convert /cobs to ethanol. Starch used for higher value biopolymers

 Abengoa (Spain): pilot scale using wheat straw associated with grain to ethanol plant Examples of Sustainable Bioprocesses (OECD Report 2001)

Cu leaching-low grade chalcopyrite Use of Thiobacillus sp. Lower capital and operating costs . Reduced energy costs and sulphur dioxide emissions ( BHP-Billiton )

Riboflavin (vitamin B2) 6 step chemical process replaced by single step with GM strain of Bacillus subtilis ( Hoffmann LaRoche )

Ligno-cellulosics to fuel ethanol Use of recombinant yeast with agricultural and forestry residues ( Iogen and Shell Canada ) OECD Report on Sustainable Development (2001)

 Case studies : pharmaceuticals, bulk chemicals, food and feed, textiles, pulp and paper, minerals and energy

 General conclusion : for selected processes - cost savings, reduced energy inputs, better pollution control

 Greater potential for enhancement for bio- based processes compared to chemical ones (eg enzyme-based biocatalysts) Technological Hurdles

 Cost effective pretreatment needed. Current options: size reduction, steam explosion, conc./dilute acid or alkali digestion, enzyme hydrolysis

 Enzyme (cellulase) costs significant - 20-fold cost reductions recently achieved (gene shuffling, protein engineering techniques)

 Recombinant microbes needed for fermentation of C5 (xylose, arabinose) & C6 (glucose) sugars. Hydrolysates may contain inhibitors

 By-product market needed for non-reactive lignin (15% total). Potential use in paints and adhesives R&D Focus at UNSW

- Research group active at UNSW in Industrial Biotechnology over past decades

- Emphasis on high productivity fermentation processes for bioethanol/fine chemicals

- R&D projects with Australian and overseas governments and industries

- Current collaboration with Dupont/NREL on pilot scale process for ethanol from residues from corn processing Electron microscope picture of Zymomonas mobilis (ZM4) Flocculent Z.mobilis ZM401

 High productivity repeated batch fermentations achieved with flocculent cells Continuous cell recycle process for high productivity fermentation

Batch kinetics of rec Z. mobilis Zymomonas-based process for conversion of lignocellulosics Australian R&D : Pilot Scale lignocellulosics to ethanol

 Design and Feasibility Study: NSW State Forests, AGO, Manildra Starch (2000). Feedstock 2 t/d (wood chips); 350L/t ethanol. Estimated cost of pilot plant $A 16m.

 pilot plant : QUT/Mackay Sugar Conversion of to ethanol. Current funds: $A 3.1m from Queensland Govt. Further funds sought from Federal Govt., sugar industry

Dupont Integrated Corn Biorefinery (ICBR) : Biopolymers

 Joint venture with Tate and Lyle  Production of 1,3 propandiol (PDO) as an intermediate for the biopolymer Sorona  Use of genetically engineered E.coli for fermentation of hydrolysed corn starch  Plant construction commenced early 2004. Dupont Integrated Corn Biorefinery (ICBR) : Fuel Ethanol

 Lignocellulosic residues (stover, cobs) from corn  DOE supported project ($A50m) in collaboration NREL/Diversa/Harvesting Companies  Use of rec Z.mobilis  Life Cycle Analysis re energy/water requirements Opportunities in Australia: Integrated Biorefinery Concept

 Sugar industry: expanded fuel ethanol, higher value products (eg amino acids, enzymes, high value protein feed)

 Starch industry: higher value modified proteins, ethanol from starch/waste stream conversions

 Agro-forestry: trees for salinity control, for fuel ethanol and/or electricity co- generation. CSIRO Report : Beyond 2025: Transitions to a Biomass-Alcohol Economy (1999).